How Rising Energy Costs Are Changing the Future of Manufacturing | Ep. 113 [David March]

Now, you've also talked about using backup generators or battery systems not only for resilience, but also to reduce electricity spend through demand change management.

How can the right power strategy create both protection and financial upside?

So there are-- If we look at our bill, our electricity bill, we can break it into two big pieces.

One is energy, the actual electrons coming through.

That's gotten very volatile, okay? The pricing on that's gotten very volatile.

Mm-hmm.

And then the other one is called your demand, or your what's called cap and trans charges.

This is how much you have to pay to support all of the infrastructure that's required to bring that power to you.

The towers, the wires, the transformers, the substations, all of that.

Okay.

The amount that you pay for energy is purely done by market dynamics, so supply and demand at any point in time during the day, et cetera, et cetera.

It's volatile.

As I said, super volatile.

Most businesses can't manage, don't wanna manage volatility because of its impact on their P&L, right? They don't wanna have, like, one month it's really good, and the next month it's, it's terrible 'cause power prices.

So they'll typically contract for a fixed price power.

But they're gonna pay 20% to 30% more than what that energy would be if they just took the volatility risk themselves.

They just don't wanna do, because predictability in an organization is so important.

Right.

So they wanna be predictable.

[coughs] Excuse me.

But if I had a backup generator, now the backup generator has to be EPA certified for what's called non-emergency use.

I can use that backup generator to self-generate during the times when prices are very high, and then buy, buy, buy low, sell high, in a sense.

And we can usually reduce the energy spend by, for a company, you know, by 20% to 30%.

Just by putting them on what's called the wholesale index-

Huh